Wednesday, October 30, 2013

Cash for Clunkers: An Evaluation of the Car Allowance Rebate System, by Ted
Gayer and Emily Parker: The Car Allowance Rebate System (CARS) or “cash
for clunkers” program, launched during the height of the recession with the
intention of stimulating the economy, creating jobs, and reducing emissions,
was actually far more expensive per job created than alternative fiscal
stimulus programs. Ted Gayer and Emily Parker have performed a wide-spread
evaluation of the various aspects of the program, from numbers of vehicles
traded-in to impact on GDP, cost per job, environmental impact and the types
of consumers who took advantage of the program. Among other conclusions,
they found that:

The $2.85 billion program provided a short-term boost in vehicle
sales, but the small increase in employment came at a far higher implied
cost per job created ($1.4 million) than other fiscal stimulus programs,
such as increasing unemployment aid, reducing employers’ and
employees' payroll taxes, or allowing the expensing of investment costs.

Total emissions reduction was not substantial because only about
half a percent of all vehicles in the United States were the new, more
energy-efficient CARS vehicles.

The program resulted in a small gasoline reduction equivalent only
to about 2 to 8 days’ worth of current usage.

In terms of distributional effects, compared to households that
purchased a new or used vehicle in 2009 without a voucher, CARS program
participants had a higher before-tax income, were older, more likely to
be white, more likely to own a home, and more likely to have a
high-school and a college degree.

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'Cash for Clunkers: An Evaluation'

From Brookings:

Cash for Clunkers: An Evaluation of the Car Allowance Rebate System, by Ted
Gayer and Emily Parker: The Car Allowance Rebate System (CARS) or “cash
for clunkers” program, launched during the height of the recession with the
intention of stimulating the economy, creating jobs, and reducing emissions,
was actually far more expensive per job created than alternative fiscal
stimulus programs. Ted Gayer and Emily Parker have performed a wide-spread
evaluation of the various aspects of the program, from numbers of vehicles
traded-in to impact on GDP, cost per job, environmental impact and the types
of consumers who took advantage of the program. Among other conclusions,
they found that:

The $2.85 billion program provided a short-term boost in vehicle
sales, but the small increase in employment came at a far higher implied
cost per job created ($1.4 million) than other fiscal stimulus programs,
such as increasing unemployment aid, reducing employers’ and
employees' payroll taxes, or allowing the expensing of investment costs.

Total emissions reduction was not substantial because only about
half a percent of all vehicles in the United States were the new, more
energy-efficient CARS vehicles.

The program resulted in a small gasoline reduction equivalent only
to about 2 to 8 days’ worth of current usage.

In terms of distributional effects, compared to households that
purchased a new or used vehicle in 2009 without a voucher, CARS program
participants had a higher before-tax income, were older, more likely to
be white, more likely to own a home, and more likely to have a
high-school and a college degree.